BG Group Place

Heritage Plaza

One Allen Center

Two Allen Center

Three Allen Center 1600 Smith 1001 Fannin

Bank of America Center

One Shell Plaza

Wells Fargo Plaza

1100 Louisiana 609 Main 1000 Main LyondellBasell

Tower2 Houston

CenterFulbright

Tower5 Houston

CenterPennzoil

Place North Tower

Pennzoil Place South Tower

JP Morgan Chase 717 Texas Total Plaza Capitol Tower

RBA (s.f.) 972,474 1,212,895 993,297 995,623 1,194,719 1,098,399 1,385,212 1,268,480 1,228,923 1,721,242 1,327,882 1,056,658 837,161 1,061,351 1,024,956 1,247,061 580,875 679,337 664,940 1,656,529 696,228 843,533 778,344

Percent leased 93.0% 99.0% 90.8% 90.9% 96.7% 85.2% 97.8% 92.5% 98.4% 87.4% 99.2% 50.9% 99.7% 95.1% 52.6% 90.3% 75.1% 64.4% 80.1% 93.6% 48.9% 74.0% 27.0%

Year built/ renovated 2011 1986 1972/1992 1977/1992 1980 1984 1981/2005 1983/2001 1970/2012 1983 1980 2017 2003 1978/1996 1974/1996 1982/1999 2002 1975 1975 1982/2012 2003 1971/1999 2019

The Skyline market for Houston is defined as the Trophy market, which is further defined as top-tier Class A product that is non-owner occupied, larger than 500,000 square feet, and located in a centralized core Houston location. Houston Skyline

80

70

60

50

40

30

20

10

Total vacancy (%) vs. annual net absorption (s.f.)

-600,000

-400,000

-200,000

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q12017

Skyline annual net absorptionSkyline total vacancy %High vacancy putting a damper on rents in

Houston’s Skyline16.4%Direct vacant

778,344Under construction (s.f.)

$46.46Direct average asking rent ($ p.s.f.)

Despite headwinds in the form of abundant available space and erratic tenant demand, Houston’s Skyline inventory remains well-positioned to attract prime tenants in the market thanks to its well-capitalized owners and growing amenity base. - Reid Watler

Skyline analysis

Occupied Direct vacant Sublease vacant

Parking, other useFuture available Retail

“ “

© 2017 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof. All data is represensentative of Q1 2017.

www.jll.com/Skyline | ©2016 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof. Licensed Real Estate Broker.

BG Group Place Heritage Plaza One Allen

CenterTwo Allen

CenterThree Allen

Center 1600 Smith 1001 Fannin Bank of America Center

One Shell Plaza

Wells Fargo Plaza 1100 Louisiana 609 Main 1000 Main LyondellBasell

Tower2 Houston

Center Fulbright Tower 5 Houston Center

PennzoilPlace North

Tower

PennzoilPlace South

TowerJP Morgan

Chase 717 Texas 1201 Louisiana

RBA (s.f.) 972,474 1,212,895 993,297 995,623 1,194,719 1,098,399 1,385,212 1,268,480 1,228,923 1,721,242 1,327,882 1,056,658 837,161 1,061,351 1,024,956 1,247,061 580,875 679,337 664,940 1,656,529 696,228 843,533

Percentleased 98.5% 98.9% 87.3% 97.3% 94.1% 85.7% 98.5% 91.6% 97.6% 91.8% 99.4% % 98.0% 94.8% 58.4% 91.2% 91.1% 69.5% 78.0% 95.8% 97.5% 70.3%

Direct rent (FS) $56.91 $55.28 $46.18 $45.01 $46.02 $38.43 $47.04 $50.32 $47.94 $50.96 $47.44 $54.00 $50.83 $44.46 $44.14 $45.37 $50.79 $44.60 $44.60 $49.49 $52.77 $41.55

Year built/ renovated 2011 1986 1972/1992 1977/1992 1980 1984 1981/2005 1983/2001 1970/2012 1983 1980 2016 2003 1978/1996 1974/1996 1982/1999 2002 1975 1975 1982/2012 2003 1971/1999

square feet in a centralized core Houston location. The key indicator for inclusion or exclusion is based on rent levels. The current threshold requires that buildings consistently garner rents greater than $27.00 NNN.

Eli Gilbert Research Director

Chrissy Wilson Senior Vice President

John Pruitt Executive Vice President

Houston Occupied Direct vacant Sublease vacant

Parking, other useFuture available Retail

80

70

60

50

40

30

20

10

2016

Direct vacancy (%) vs. direct average asking rent ($ p.s.f.)

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q12016

Skyline direct average asking rentSkyline direct vacancy %

HoustonTenants and landlords remain cautious in the face of market volatility 9.4%

DIRECT VACANT-1.2%

2015 NET ABSORPTION (% OF INVENTORY)

1,056,658S.F. UNDER CONSTRUCTION

9.8%2015 ASKING RENT

GROWTH

$47.97DIRECT AVERAGE ASKING RENT ($ P.S.F.)

$435.5m2015 & 2016

SALES VOLUME ($)

Houston’s Skyline is characterized by contradictions. A 37.0 percent drop in leasing activity in 2015 set the stage for slight negative absorption to start 2016, yet asking rents remain

below 10.0 percent even with deceleration in tenant activity.

Despite uncertainty facing the Skyline, two things remain clear. First, the Skyline continues

of 2016, the Skyline recorded a direct vacancy rate of 9.4 percent, lower than the Class A market’s 15.5 percent. Additionally, higher asking rents were recorded for the seventh consecutive quarter: $31.83 per square foot NNN in Skyline properties, versus $23.70 per square foot NNN in overall Class A.

Second—and notwithstanding the superior occupancy and asking rent spread between the Skyline and broader Class A market—leverage within the Skyline will continue to shift in favor of tenants in 2016. This will manifest as a widening delta between asking and strike

Skyline leverage Skyline analysis

Neutral market

2017

2018